Apple Says Calif. Privacy Law Doesn't Apply To Web Retailers

by Wendy Davis, Nov 5, 2012, 5:33 PM

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Apple is asking California's highest court to rule that a state law limiting data collection by merchants who accept credit cards doesn't apply to online retailers.

Imposing the Song-Beverly Act's requirements on Web retailers "threatens to produce unintended and absurd results," Apple argues in its legal papers. The 21-year-old privacy law bans retailers from requesting and storing the street addresses of consumers who pay by credit card.

Apple argues that it doesn't make sense to apply the Song-Beverly law to online retailers, given that they can't verify identity by asking for a photo or comparing an in-store signature to the one on a card.

California's Supreme Court is slated to hear arguments on Wednesday.

The matter stems from a potential class-action lawsuit against Apple filed last year by David Krescent. He alleges that Apple violated California's law by requiring him to provide his address when he purchased media from the company.

Krescent says the law should apply regardless of whether consumers make purchases in person or on the Web. "The purpose of the Act is to prevent merchants from overreaching in their personal information requests," he says in court papers.

He argues that even though the law should be interpreted broadly, it was enacted before online commerce became common. "The Legislature could have limited the Act, and could have stated the Act does not apply to any transaction where the merchant does not actually physically obtain the credit card...yet the Legislature deliberately chose not to do so," he writes.

But Apple says that online retailers need to be able to collect personal data from customers for security purposes. "Unfortunately, computer criminals can engage in online credit card fraud on a vast automated scale, requiring even greater vigilance and verification than in person-to-person transactions," the company writes.

"Unlike brick-and-mortar transactions, the only effective means that an online e-retailer has to prevent fraud is to ask the customer for personal identification information that a fraudster would have difficulty obtaining, namely, the cardholder's billing address and telephone number," it adds.

Apple isn't the only online company facing suit for allegedly violating the law. Cases also are pending against Ticketmaster and eHarmony. The California Supreme Court is holding off on a decision in those matters until it rules on the Apple case.

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